BUTTE, Mont., March 29, 2016 /PRNewswire/ -- NorthWestern Corporation d/b/a NorthWestern Energy (NYSE: NWE) (the "Company") announced a 3 – 2 decision today from the Montana Public Service Commission ("MPSC") to disallow replacement power costs from a July 2013 outage at Colstrip Unit 4 and cost related to generation portfolio modeling. The decision will result in an approximately $9.7 million pretax charge to earnings in 2016. As previously disclosed, during a June 2014 MPSC work session, the MPSC identified approximately $11 million of incremental market purchases related to the Colstrip outage for additional prudency review. The MPSC ultimately disallowed $8.2 million of replacement power costs and an additional $1.5 million of portfolio modeling costs previously recovered through the Company's electric supply trackers.
State law allows recovery of all prudently incurred costs for plant operations including replacement power costs when a facility is off-line. Inclusion of these costs in the supply tracker is consistent with the treatment of replacement power during previous outages at Colstrip.
"Being solely a regulated utility with a majority of our operations in Montana provides focus for our work, and purpose and pride to our employees who are dedicated to serving our customers. It also means that regulatory decisions directly affect our ability to invest in serving Montana. We will manage our budgets to implement the Commission's decision. We are answering questions from credit ratings agencies, sell-side analysts and debt and equity investors who support our investments in essential electric and natural gas service," said CEO Bob Rowe. "We've assembled a diverse hydro-based generation portfolio in Montana that is nearly 70% carbon-free by nameplate. Our 30% ownership in Colstrip Unit 4 is a critical part of that portfolio, with an availability factor of 94%."
Vice President and General Counsel Heather Grahame continues, "We are carefully evaluating the decision and considering our legal options. It is particularly disappointing that Montana is disallowing these outage related costs when no other state utility commission has found the utility was imprudent as it relates to the 2013 Colstrip Unit 4 outage. In fact, the Idaho Public Utilities Commission concluded: '[T]here is no evidence of imprudence in this case.' In the State of Washington, Avista was required to demonstrate that costs were not the result of imprudent actions. The Washington Utilities and Transportation Commission Staff reviewed Avista's filing and supported the conclusion that the outage was not the result of imprudent actions by the utility and the Commission authorized rates to be adjusted as requested in the filing."
Because the $9.7 million electric supply cost disallowance discussed above relates to prior years, we will exclude this charge from our Non-GAAP adjusted earnings calculation. With this adjustment, and an adjustment for the unseasonably mild weather experienced so far in 2016, the Company reaffirms the previously announced full-year Non-GAAP adjusted earnings guidance of $3.20-$3.40 per diluted share for 2016.
About NorthWestern Energy (NYSE: NWE)
NorthWestern Corporation, doing business as NorthWestern Energy, provides electricity and natural gas to approximately 701,000 customers in Montana, South Dakota and Nebraska. More information on NorthWestern Energy is available on the company's Web site at www.northwesternenergy.com.
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SOURCE NorthWestern Corporation